Indiareit to launch $500 mn offshore fund

Buoyed by the booming realty sector, real estate fund Indiareit is planning to come out with a $500 million fund, its second overseas fund, by the end of the current year to invest in properties in Mumbai, Bangalore, Pune and Hyderabad.

The fund will have a green-shoe option of $200-250 million, said MD & CEO of Indiareit Fund Advisors. Indiareit expects both individual and financial institutions, including insurance and private equity players from the US, Europe, the Middle East, Japan and South-East Asian countries, to invest in the funds. The minimum investment size for individuals in the fund would be as low as $0.5 million, while institutions would have to shell out $5 million to get a pie of the fund, to be raised through distributors.

There is a lot of euphoria for Indian real estate sector among the big PE players overseas and the company intends to partner them to become a major player in the country's real estate sector. Indiareit will invest the fund over a period of four years. All leading distributors would be engaged to market the fund.

Set up in March 2006, Indiareit Fund advisors had earlier came out with an $200 million offshore fund in which major private equity player 3i had invested $40 million. Indiareit source said bulk of the investment in the fund had came from the Middle East while there were private equity investments from Singapore and the UK.

Recently, Indiareit had launched a Rs 350 crore domestic fund with a green-shoe option of another Rs 350 crore. So far, it has raised Rs 500 crore out of the fund and expects to close the fund in the next two to three weeks.